When Should You Make an Offer Below Asking Price? 5 Clues It’s Time to Take a Gambleon
I would like to share some statistics, and some observations from brokerages other than myself and RE/MAX Coastal Real Estate to provide a broad view of constructive questions to ask yourself. I’m humbled by all your compliments in my performance, however, it’s not just me, it’s the research we network and share.
Homes are expensive, and getting even more so every day. (Also, water is wet and the sky is blue!) Making an offer over asking price—sometimes by absurd amounts—has become a harrowing norm for today’s buyers.
But even as the market rockets upward, there are always those buyers. You know the type: You visit their new home for a dinner party, and halfway through the meal, they lean over to whisper in your ear.
“We got a killer deal,” they say. “Under list price.”
How much below asking price should you offer on a house? Or is it something you shouldn’t try at all? The not-so-simple answer: It all depends on the market you’re in and other factors you should weigh before you lowball with abandon.
Every home buyer wants to score a deal, after all. But set your offer too low, and you could risk offending the sellers and having them write you off completely. As such, it’s all about striking the right balance. Here are some questions to ask yourself to help you figure out that happy medium.
Your ability to present a lower offer will depend greatly on current market conditions—meaning if it’s a buyer’s or seller’s market,” suggests Cynthia Jacinta Keskinkaya, co-founder of the Keskinkaya Dartley Team at Douglas Elliman in New York City.
So before you make any offer, determine what type of market you’re in. Traditionally, buyer’s markets come with a lot of flexibility on price, because available inventory is high and houses tend to sit on the market for longer. Here, sellers tend to be more willing to negotiate because offers are few and far between.
In a buyer’s market, I would not hesitate to submit an offer that’s around 10% below asking,” advises Chris Cloud of EXIT Heritage Realty in Haymarket, VA. “Most sellers will at least see that as worthy of a counteroffer.”
In a seller’s market, on the other hand, it’s much harder to go below asking price at all, because inventory is low, and multiple buyers tend to be interested in the same properties. So, in this case, it’s best not to lowball at all, and offer list price. Your agent can help you determine which market you’re currently in, or here’s more advice on how to tell if you’re in a buyer’s or seller’s market.
How long has the listing been active?
“By paying attention to the property history, you can get a better idea of the demand for that house,” notes Jennifer Carlson of Coldwell Banker in East Greenwich, RI. “Two days on the market? Probably not a good idea to go in with a lowball offer $50,000 below asking price. A whole year on the market, with price reductions? Go ahead and roll the dice. The longer a house has been on the market, the less of an upper hand the seller has in negotiation.”
However, Michael Russell of Ratchet Straps USA also emphasizes the importance of making sure a lowball offer doesn’t insult the seller, if you want it to be taken seriously. “The rule I’ve always followed is to never go more than 25% below the listed price,” he says. “Chances are, after fees, commission, and sentimental value, the sellers are already hurting. If you dip below that point, they may disregard your offer entirely.”
Fortunately, info on how long a house has been on the market can be easily found on most listings—or if not, any good real estate agent will have access to this information through the multiple listing service. Ask them to pull it up for you, and use it as a reference as you draw up your offer.
How does the price compare to similar homes in the area?
Once you have a general sense of how much wiggle room you have to work with, it’s time to look more specifically at recent sales in your desired neighborhood. Ask your agent to work up a comparative market analysis (also called a comp or CMA), which will show you the list and sale prices for similar homes that have sold in the last few months. Use that as your guide.
“The comparables should be your go-to on a first offer,” says Shane Lee on behalf of Realtyhop. “If, for instance, a similar property in the same neighborhood is quoted $10K less, then it makes sense for you to go $10K below the asking price.”
How badly do you want the home?
Last but not least, ask yourself: How would you feel if your offer got rejected? If you think that you’ll regret missing out on the home, it may be worth it to consider offering exactly what they’re asking for—or a bit more—to seal the deal that the home will be yours.
If you want the home badly enough, you need to make the seller an offer they can’t refuse,” advises Jenny Ditty Kang, JD, a real estate agent with WR Realtors in Louisville, KY.
However, if you think you’ll be able to move onto the next property without issue, there’s no harm in trying to score a deal.
This last piece of advice may be the most subjective of all, but it’s true. Remember, submitting a low offer is always a risk. Ultimately, it’s up to you to determine how much of a gamble you’re willing to take on the house.
Everyone has asked, here are the statson
In TBGCC we have 36 listings, and some of these homes have been on the market off and on for over a year. I see agents becoming more reasonable with their recommended list price, but then again there are some that are so far out of the ballpark it’s hard to understand their reasoning, and just representation to their sellers.
15 are pending and appraisals are killing some deals. A good Realtor knows how to prepare and negotiate a sale over the appraisal price. I’m good at this and my record speaks for its self.
Eleven (11) have sold in the past 30 days. Out of the eleven sold, the price per sq. ft. jumps all over the place. From 81.00 to an all-cash deal for $151.00 per sq. ft.
The average sale price per square feet on homes between 1450 to 1750 is around $133.00 a sq. ft. A lot of variables and you should call me for an appointment to get a real understanding of the value of your home.
The average sale price per home over 1750 sq. ft. is averaging $128.00 a sq. ft. and continues to be somewhat lower than the smaller homes. A lot of variations come in to play and I would need to sit down with you to explain these.
Different communities outside of Tampa Bay Golf and CC are really doing much better in price per sq. ft. but the variables are so broad it’s not fair to compare to the community.
Pink, White, Blue, Gray, Gold, or Black?on
You can youtube.com these internet sensations. For real results, who else to call but Dan Swing 352-834-1236
Are you in the know?on
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Many realtors may have this designation, however, without renewing annually you are not truly in the know and therefore makes it impossible for you to assist your buyers and sellers as my staff and I are able to do. The tools provided in this network are second to none.
My ability to access buyers in this network reaches out throughout entire North America. List your property with my team and we assure you the best marketing coverage possible. Our results are still staggering, and in spite what my colleagues may suggest, they cannot dispute my success rate.
I look forward to working with you. Just another way of servicing our buyers and sellers, the more networking we actively share the higher standard of success we can provide our clients.
A community update for TBGCCon
34 homes are currently listed, higher than this time last year. Fifteen (15) are pending and the average list price is right at $200,000. The average sold price per square foot Financed is $109.00! Important to know because appraisals are coming in much lower than the listing prices.
On the other side of the coin “CASH” buyers average purchase per sq. ft. is $123.00 per square foot. Two homes have sold for $145.54 and $151.00 per sq. ft and well over the appraised price. Location, condition, upgrades etc. are extremely important, and in most cases will be taken into consideration by an Appraiser. However down and dirty appraisals are coming in extremely lower than listing price, as much as $40,000 or more less than the original listing price. Don’t be miss guided by false promises.
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